V. 19:5 (16-24): Relative Performance Charting by Phil Doyle

Changing Your Market Perspective Relative Performance Charting

There’s always a hot sector, but it’s not always obvious where it is. Here’s a quick, visual way to find it. by Phil Doyle

Relative performance charting compares the rate of price change of two or more tradable instruments. Its purpose is to point out what’s hot and what’s cold, so you can focus on the best action.

A broad range of names are applied to relative performance charts (RPC): relative strength charts, rebased charts, dollar-growth charts, and performance charts. They are all variations on the same theme. Although this methodology has long been popular among portfolio and money managers, it is only recently starting to gain popularity on trading floors, as traders discover that relative performance charts are well suited to short- as well as long-term trading horizons.